Hematology/Oncology Care Specialists of Western Pennsylvania, P.C

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Federal Trade Commission staff has advised a network of 35 hematologist/oncologists in the Pittsburgh, Pennsylvania-area that the network does not appear to violate federal antitrust laws. The for-profit network, Hematology/Oncology Care Specialists of Western Pennsylvania, P.C. (HOCS) is being established to develop and manage the provision of hematology/oncology services to patients through a network of providers in the Pittsburgh area, and had sought an FTC staff opinion on its antitrust implications.

HOCS plans to market its network services primarily on a capitated basis to third-party payors, including health maintenance organizations and possibly self-insured employers. (Drug therapy will be provided on a modified fee-for-service basis until sufficient cost and utilization data is developed to allow HOCS to fold these services into the capitation payment.) Each payorþs capitated payment will cover all physician services rendered under the contract, and participating physicians in the network will share the risk that the cost of providing services to a payor group will exceed that payment. HOCS also plans to develop and implement quality assurance and utilization review programs, and to offer group purchasing benefits to participating physicians for billing services, insurance, medical equipment, and other supplies.

HOCS will provide services in an eight-county area, and compete with one other similar network. The physicians, who account for fewer than 30 percent of the specialists in the area, will participate on a non-exclusive basis (which means that they also can participate in other such ventures), but they must participate in agreements negotiated by HOCS.

In a letter signed by Mark J. Horoschak, Assistant Director for Health Care in the FTCþs Bureau of Competition, the FTC staff said it appears that HOCS falls within the antitrust þsafety zoneþ for non-exclusive physician network joint ventures, and so generally would not be challenged by the federal antitrust agencies. The safety zone applies to such ventures when they comprise 30 percent or less of the physicians in each physician specialty with active hospital staff privileges who practice in the relevant geographic area and who share substantial risk, and HOCS appears to meet each of these criteria. The physicians share risk through acceptance of capitated contracts, according to the staff letter. Agreement among the participating physicians on fee-for-service prices for drug therapy during the initial phase of HOCSþs operation would appear to be ancillary to the main purpose of the joint venture, and therefore would not raise actionable antitrust concerns, the staff said.

NOTE: This letter sets out the views of the staff of the FTCþs Bureau of Competition, as authorized by the Commissionþs Rules of Practice. It has not been reviewed or approved by the Commission. As the Commissionþs rules explain, the staffþs advice is rendered þwithout prejudice to the right of the Commission later to rescind the advice and, where appropriate, to commence an enforcement proceeding.þ Staff advice concerning issues covered by the Federal Trade

Commission/Department of Justice Health Care Policy Statements will be given within 90 to 120 days (depending on the topic) after all necessary information is provided.

Copies of the staff advisory opinion letter, the original inquiry, and the FTC/DOJ Health Care Policy Statements, which contain the antitrust safety zones referenced above, are available from the FTCþs Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326-2502. To find out the latest FTC news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTCþs World Wide Web site at: http://www.ftc.gov

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